Public Bill Committee

[Mr. Christopher Chope in the Chair]

Christopher Chope: Before we begin, I have a few announcements to make. The hon. Member for Stafford has asked me informally whether people may remove their jackets, should they so wish. That is certainly all right by me. Will hon. Members ensure that their mobile phones and pagers are turned off or switched to silent during our proceedings?
Copies of the money resolution connected with the Bill are available in the room. I remind hon. Members that adequate notice should be given of amendments. As a general rule, I and my fellow Chairman do not intend to call starred amendments, nor do we intend to call amendments that are not signed by members of the Committee because we presume that they would not be moved.
I remind hon. Members about the procedure at the start of today’s sitting. The Committee will be asked first to consider the programme motion on the amendment paper for which debate is limited to half an hour. We shall then proceed to a motion to report written evidence before starting clause-by-clause scrutiny.

Patrick McFadden: I beg to move,
That—
(1) the Committee shall (in addition to its first meeting at 10.30 a.m. on Tuesday 17th June) meet—
(a) at 4.00 p.m. on Tuesday 17th June;
(b) at 9.00 a.m. and 1.00 p.m. on Thursday 19th June;
(c) at 11.00 a.m. and 4.00 p.m. on Tuesday 24th June;
(d) at 9.00 a.m. and 2.00 p.m. on Thursday 26th June;
(e) at 10.30 a.m. and 4.00 p.m. on Tuesday 1st July;
(2) the proceedings shall be taken in the following order: Clause 1; Schedule 1; Clause 2; Schedule 2; Clauses 3 and 4; Schedule 3; Clauses 5 to 28; Schedule 4; Clauses 29 to 37; Schedules 5 and 6; Clauses 38 to 62; Schedule 7; Clauses 63 to 77; new Clauses; new Schedules; remaining proceedings on the Bill;
(3) the proceedings shall (so far as not previously concluded) be brought to a conclusion at 7.00 p.m. on Tuesday 1st July.
I welcome you to the Chair, Mr. Chope. I am sure that I say on behalf of the whole Committee how very much we are looking forward to your guidance in our deliberations. When I first glanced at the membership of the Committee and saw your name beside a little passport-sized photograph, I thought we would be in for a long, hot summer—we might still be. I then realised that you were in the Chair, which I thought was a bit like Barcelona having Ronaldinho as the referee rather than leading the attack.
I thank all those who have been involved in the Bill’s deliberations so far. We have had extensive consultation with businesses, regulators and those in many local authorities—all of whom have contributed extensively, for which we are grateful. The Bill was also subject to extensive and constructive debate in the other place and it comes to us improved by the work of colleagues there. It will change how we enforce regulations throughout the country, and it will create an expert body for the improvement of regulations at local level. It will create a framework for a more targeted and proportionate sanctioning of non-compliance with regulation, and it will assist in the reduction of the imposition of unnecessary burdens by our regulator. I am sure that we shall debate all such matters in significant detail over the coming weeks, and I look forward to those deliberations.

Mark Prisk: I add my welcome to you, Mr. Chope. I know that you will provide us with firm and fair guidance from the Chair as we consider the matters before us. I also welcome the Minister. I am sure that we shall have a positive dialogue, and I hope that we can provide him with some relief from the endless debates on post office closures that have, I suspect, been a darker period for him. I hope we can provide him with a little relief from that in our social responsibility role on the Conservative Benches. I welcome the fact that no knives or guillotines are contained in the programme motion and I know that as a staunch parliamentarian, Mr. Chope, you will welcome the fact that there are no such limits on our ability to consider the matters in their full. That is important because sometimes Labour Members take a heavy-handed approach, which can limit our ability to explore the unintended consequences of such issues.
As the Minister said, the Bill began in the other place and, to use his words, it has been improved. The Government have been forced to accept more than 12 major concessions, and I put on the record my sincere congratulations to all the Members of the other place who participated in that process, particularly my Conservative colleagues who engaged actively in that scrutiny and did their job extremely well. However, there remain some worries and the Minister referred to one or two of them, which is why the programme motion is important.
There are concerns about the powers and scope of the Bill, about accountability, about the potential for injustice in what might be seen as a parking fine approach to regulation in part 3 and about whether the Bill can achieve what Ministers are promising. However, given the concessions already made in another place, my aim in the debate is to be precise in my scrutiny and concise in my remarks, so I have no intention or wish to oppose the motion.

Lorely Burt: Last but not least, I welcome you to the Chair this morning, Mr. Chope. I add my thanks to the bodies that so kindly advised our team, including the CBI, the Local Authorities Co-ordinators of Regulatory Services and the British Retail Consortium; they have helped us tremendously in understanding some of the practical implications of the Bill. As my Conservative colleague said, the Bill has been much improved in the Lords. The contribution of my colleagues in the Lords has been a valuable help in making the Bill stronger, so that it will balance the needs of business with the local requirements of enforcers on the ground—at the coal face—and the practical requirements with the needs of local democracy.
I am looking forward to a concise debate on the outstanding issues that we have to discuss. The Liberal Democrats have tabled only a small number of amendments and we look forward to taking the debate forward in a spirit of constructive criticism.

Question put and agreed to.

Ordered,
That, subject to the discretion of the Chairman, any written evidence received by the Committee shall be reported to the House for publication.—[Mr. McFadden.]

Christopher Chope: Copies of any memorandums that the Committee receives will be made available in the Committee Room. We now proceed to clause-by-clause scrutiny.

Clause 1

LBRO

Question proposed, That the clause stand part of the Bill.

Patrick McFadden: The clause is a simple one, establishing the Local Better Regulation Office as a corporate body. There are a number of amendments tabled to the accompanying schedule 1, which sets out in detail how LBRO is intended to be established in statute. I shall reserve my main comments for those amendments, which attempt to alter in various ways the establishment of LBRO. The central part of the Bill is to establish the body, to carry out a number of functions to do with better regulation—advice to local authorities and central Government and adjudicating in certain ways between primary and enforcing authorities around the country. The clause is one of the central building blocks of the Bill, establishing LBRO to further the better regulation agenda at local level.

Mark Prisk: I am grateful to the Minister for those brief but helpful opening remarks. He said that the clause is short, but equally—in his words—it is essential. It establishes the Local Better Regulation Office, which we will perhaps shorten to LBRO with your permission, Mr Chope. The provision follows from the Hampton review, which looked at the whole way in which risk-based regulation should proceed. It is, in essence, the Government response to the need for raising quality and improving the narrowing wide variance in how local authority regulatory services operate.
We are looking at not just trading standards, but environmental health and matters such as licensing. There are several concerns, not least the fact that we are being asked to believe that a single organisation—a reasonably small organisation—will be able to deliver a significant change in regulatory practice for nearly 500 different local authorities. Effecting the kind of improvements that Ministers seek, especially for the worst regulators, would need, in my view and the view of many of those involved, a considerable change in the internal management, training and culture of those organisations. We are being asked to agree to a small organisation taking on what is a very significant task. My question to the Minister, therefore, is how will the LBRO deliver that change to so many different organisations?

Christopher Chope: Does the Minister wish to respond?
Mr. McFaddenindicated dissent.

Christopher Chope: It is not compulsory. If the Minister does not rise I presume that he will not be responding and we shall move on.

Mark Prisk: I was rather anticipating that as a question was asked from the Opposition Benches, the Minister might provide an answer. I hope that he will be able to do so.

Patrick McFadden: I am happy to elucidate further upon LBRO and how it will do its job. The hon. Gentleman is absolutely right to root the discussion in the Hampton report, which was carried out three years ago. Hampton identified two basic problems in local better regulation. The first was inconsistency. Different advice was being given to businesses operating around the country; a business might get a green light in one local authority area, but a red light in another. Hampton found that to be costly and cumbersome to business. The second major flaw he identified was inflexibility in how regulation was enforced, particularly in the penalty regime. That applies more to part 3 than to clause 1, but those were the two issues that Hampton identified.
Our response is to establish the Local Better Regulation Office. The hon. Gentleman is right: local authority regulators sit at the centre of a complex system. His question is: how will a small organisation deal with the two quite major issues that Hampton identified? The first thing that I point him to is the board of LBRO. The LBRO has already been established as a company and a board has been appointed, and I hope he agrees that the board represents significant expertise from local authority, trading standards and business backgrounds. That expertise will be of significant help in enabling the LBRO to deliver its aims.
The LBRO will work closely with national regulators, local authorities and businesses, seeking their assistance and co-operation in delivering better regulation. It has a relatively small budget of about £4.5 million a year, but part of that will enable it to provide a level of financial support and assistance to local authorities in carrying out those functions. The hon. Gentleman is right to say that it is a relatively small organisation, but it will occupy a pivotal role at the centre of a complex system of regulation. The expertise of the board and the work it will do with all the different players—regulators, local authorities and businesses—will enable LBRO to carry out the job that we hope it will do.

Mark Prisk: I am grateful to the Minister for going into the background. What I am trying to tease out is a practical issue that I have a degree of scepticism about—the practical reality of a single, small organisation being able to effect cultural change in nearly 500 organisations. The Minister is a former special adviser to the former Prime Minister, Mr. Blair. I think the phrase used by Mr. Blair in those days was that he had the scars on his back from trying to effect change in Whitehall. The Minister will therefore be acutely aware of the difficulty in achieving the kind of change that I suspect he, most of business and I want to see. Does he recognise that it will be a significant challenge, and is he confident that the resources and powers in the Bill are sufficient?

Patrick McFadden: I recognise the challenge. My old boss, the former Prime Minister, was referring to the great Whitehall machine when he talked about having scars on his back. In the Bill, what we are talking about is important but in a different way. It is about how local authorities and organisations enforce regulation. The challenge for LBRO is to ensure that the two weaknesses identified by Mr. Hampton, those of inconsistency and inflexibility which I mentioned a couple of minutes ago, can be dealt with. Not all of that is done through the clause and we will go on to talk about the different powers that the LBRO uses to carry out its functions.
We believe that it should be an organisation with teeth and I welcome the hon. Gentleman’s indication that he agrees with that. Some of the amendments before us might, if passed, reduce the LBRO’s powers to be effective and could leave us with a weaker organisation. I do not want that to happen. The message from business is very important. Business wants to see clarity and consistency in the enforcement of regulation. It is one thing to have a debate about the substance of a regulation and whether it is necessary, but it is another to lack clarity about how that will be enforced in different parts of the country. That issue is an essential part of LBRO’s work.
However, it is not just about how LBRO works at local level. An important part of its job will be to speak to the regulators and to central Government about the regulations. It is not only an “eyes downward” organisation at local level; it has an important upward voice. The Government believe that currently there is a gap there, which LBRO will be able to fill. It has an important role, both in advising central Government and in ensuring consistency in the application of regulation at local level.

Mark Prisk: I am grateful to the Minister; it has been a useful exchange. Clearly, the LBRO is one of the principal elements of the Bill, and all the powers and subsequent clauses in part 1 relate to whether it will be able to fulfil its task. I remain sceptical about its ability to fulfil that role, but I hope that it achieves it. I hope that the Minister’s sunny optimism will be proven right and I would be more than happy to—I was going to say buy him a pint of Guinness, which perhaps after Friday’s marvellous result would be even more appropriate. I am happy to be proven wrong, but at the moment I am not entirely convinced. However, the clause is there and I am grateful to the Minister for putting on the record the Government’s confidence in the ability of LBRO to do this with the resources and powers that it has. On that note, I will delay the Committee no further.

Lorely Burt: May I confirm that we are discussing schedule 1?

Christopher Chope: No, we are not.

Question put and agreed to.

Clause 1 ordered to stand part of the Bill.

Schedule 1

LBRO: supplementary

Mark Prisk: I beg to move amendment No. 17, in schedule 1, page 38, line 13, leave out sub-paragraph (3).

Christopher Chope: With this it will be convenient to discuss the following amendments: No. 18, in schedule 1, page 38, line 17, leave out sub-paragraph (5).
No. 19, in schedule 1, page 38, line 20, leave out ‘special’.

Mark Prisk: These are probing amendments and seek to put certain details on the record, which I hope will enable the implementation of the legislation to be improved. Amendment No. 17 seeks to delete subsection (3) on page 38. Its purpose is to ask the Minister what we mean by Welsh Ministers. Are they members of the Welsh Executive, Ministers of the Crown, or both?
Amendment No. 18 is another probing amendment, which relates to paragraph 3(5) of the schedule. It states:
“LBRO is to pay to or in respect of the ordinary members such sums as the Secretary of State may determine by way of or in respect of remuneration allowances, expenses, pensions or gratuities.”
I am not entirely clear what that text means; perhaps there is an additional or a missing word, or a typographical error. I am not sure, but I shall be happy if the Minister would clarify that. I have three or four different interpretations of it, and I would be interested to hear the Minister’s reply as to whether there is an additional “to” in there.
Thirdly, amendment No. 19, relating to paragraph 3(6), reads:
“If the Secretary of State thinks that there are special circumstances that make it right for a person ceasing to be an ordinary member of LBRO to receive compensation, LBRO must pay to that person such compensation as the Secretary of State may determine.”
Can the Minister explain what he regards as those “special circumstances”?

Lorely Burt: I am a little confused by these amendments. I am not entirely sure why the hon. Member for Hertford and Stortford maintains that they would make enforcement more effective by taking out any rules regarding how the LBRO should be composed. If amendment No. 18 means that LBRO members would not be civil servants, why does he want to delete that?

Mark Prisk: These are entirely probing amendments. I have no wish to delete them, and it is not my wish to move them. My purpose is clarification of the Bill.

Lorely Burt: That is fine. I wait with bated breath what the Minister has to say in response.

Patrick McFadden: We had a debate about the basic purpose of LBRO, and schedule 1 gives significant detail on how the organisation is proposed to be established and run. I shall briefly answer a couple of the questions asked directly by the hon. Member for Hertford and Stortford. The term “Welsh Ministers” means members of the Welsh Executive.
He asked about the wording in paragraph 3(5) of the schedule. As I understand it, this is absolutely standard wording for describing payments to people doing this kind of work, so we see nothing unusual about that wording. The whole schedule is designed to give effect to LBRO and to enable it to carry out its work, in seeking to support local authorities in developing an approach consistent with the principles of better regulation.
The schedule—or rather, the Bill—will, as well as the functions that we have talked about, also help to give LBRO a role in preparing lists of priorities for enforcement for local government, which can be an issue, given the number of different priorities that central Government gives. In terms of the specifics of the amendments, I am glad to see that they were probing, because the effect of approving the amendments would be to neuter the body from the beginning, so I hope that the answers that I have been able to give on the subjects of payment and Welsh Ministers have been helpful.
Let me turn to the third of the amendments, amendment No. 19, which asks about “special circumstances”. We have deliberately set up the body to operate independently of Government, bringing the expertise of its members to bear on issues raised by local authority enforcement. The wording of “special circumstances” follows well established precedents, and I shall mention just a few. For example, similar measures were included in relation to board members of Natural England in the Natural Environment and Rural Communities Act 2006. The Value Added Tax Act 1994 specified that there can be compensation:
“If a person ceases to be a chairman of VAT tribunals and it appears to the Lord Chancellor that there are special circumstances which make it right that he should receive compensation”.
There is similar wording in the Criminal Justice Act 1988. The Bill follows those models and provides for the possibility of cases where the provision of some form of compensation is appropriate. Such circumstances would be rare.
I hope that I can clarify things for the hon. Gentleman. We do not believe that there should be a presumption for compensation to be paid. That is why “special” is used. Board members will come to the end of their contract naturally or could be removed for any of the other reasons set out in the schedule, including committing a criminal offence or failing to comply with the terms of their appointment. In the vast majority of cases, it would not be right for compensation to be paid. However, it seems prudent to us for the Bill to allow for unknown contingencies. The reasons for that inclusion means that we have used “special” to describe circumstances in which compensation might be paid. I hope that that helps to clarify the point.

Mark Prisk: I am grateful to the Minister for providing those clarifications. As he knows—I know you know, Mr. Chope—one of the purposes of probing amendments is not necessarily to change the legislation, but to make sure that those putting it into practice understand the Government’s intention. Often the Bill cannot provide that. Therefore, the purpose of the three probing amendments and of a good number of others is to use our deliberation to get that clarification on the record.
I am grateful about amendments Nos. 17 and 18. I am particularly grateful for the recognition and clear statement that there should be no presumption about payments under sub-paragraph 3(6). On that basis—the hon. Member for Solihull can unbate her breath—I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Mark Prisk: I beg to move amendment No. 20, in schedule 1, page 39, line 39, leave out subsection (1).

Christopher Chope: With this it will be convenient to discuss the following amendments: No. 21, in schedule 1, page 39, line 40, leave out subsection (2).
No. 22, in schedule 1, page 40, line 3, leave out subsection (4).

Mark Prisk: These are, again, probing amendments—bated breath or otherwise. Let us look at page 39, dealing with paragraph 8, on committees surrounding the operation of LBRO. Amendment No. 20 removes the provision for LBRO to establish “one or more committees”. The provision is perfectly reasonable, but it would be helpful to know the Government’s intention or wish concerning the scope of those committees. It would help us to know the limits.
Amendment No. 21 is similar. It seeks to delete sub-paragraph (2):
“A committee established under this paragraph may include persons who are neither members nor employees of LBRO.”
The clause permits anyone to be on such a committee and, as we learn later, that is a paid position. Money comes from the public purse. Who appoints? What will the basis of those appointments be?
Amendment No. 22 is about paragraph 8(4), which is at the top of page 40:
“LBRO may pay sums by way of or in respect of expenses to or in respect of a person who is a member of a committee or of a sub-committee established under this paragraph but who is not a member or employee of LBRO.”
That is a wide statement. Given the heightened public interest in expenses, to what are the rules for those arrangements subject? What independent oversight might there be, should things go awry?

Patrick McFadden: The amendments relate to the capacity of the Local Better Regulation Office to appoint sub-committees. One example of an important sub-committee that one would expect an organisation like this to appoint is an audit committee. We would also hope to allow the appointment of expert advisers to that committee and to pay its members. This is an independent body, operating at arm’s length from the Government, and it needs that independence to create the right governance arrangements for its statutory role. If I may refer to similar organisations and parallels in other legislation, both the Commission for Architecture and the Built Environment, created by the Clean Neighbourhoods and Environment Act 2005, and the Serious Organised Crime Agency, created by the Serious Organised Crime and Police Act 2005, have similar powers to create committees.
The LBRO will not necessarily stop with an audit committee; it might wish to appoint an advisory committee, to advise it on issues raised by one or more of its functions. It should be a matter for the LBRO to decide whether it wishes to go down that road, but it may set up committees that will help it achieve its objectives. I hope that that gives some clarity on the purpose of the measure.
The hon. Gentleman asked a couple of specific questions. LBRO itself would appoint the individuals. Payments would be governed by the usual public money rules. As will be discussed later, LBRO has to account to both my Department and Parliament for its expenditure in the normal way. It has been granted a budget for the next few years, pending the approval of the legislation in Parliament, but any expenditure on paying people on its committees will have to come out of that budget.

Mark Prisk: I am grateful to the Minister for responding. I have no wish to try to instruct the LBRO in advance regarding specific committees. Our purpose is to clarify exactly how this will work and what recourse there would be for Government, and thence Parliament, to ensure that it is operating in an effective way. I am not overwhelmed by the Minister’s response. I accept that there is an established principle and I presume that Nolan was the process that he was referring to as regards public deliberation. I do not know whether he wishes to consider that. I have no wish to press the amendment to a vote because I am well aware that it would prove a nonsense, but it would be helpful if the Minister reflected on clarifying which particular rules he refers to and whether he feels able to consider any advice that may be forthcoming. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Mark Prisk: I beg to move amendment No. 23, in schedule 1, page 41, line 2, at end insert
‘no later than 30 days after its receipt’.

Christopher Chope: With this it will be convenient to discuss amendment No. 24, in schedule 1, page 41, line 25, at end insert
‘no later than 30 days after its receipt’.

Mark Prisk: These two amendments deal with our ability to hold the LBRO to account. Members of the Committee will realise that the annual report of the LBRO is the principal document that the House will have in order to consider the performance of the organisation that the Bill establishes. I am trying to ensure that our scrutiny is timely. I therefore wish to insert a phrase to both paragraph 12(5) and paragraph 13(6). Paragraph 12(5) of the schedule states:
“The Secretary of Sate must lay before Parliament a copy of each report”
—that is, the annual report—
“received under sub-paragraph (2)(a).”
My amendment would insert the phrase,
“no later than 30 days after its receipt.”
I am sure that it is not the intention of Ministers to unduly or deliberately lay such documents significantly later than that—six months or a year or so—but if we are to scrutinise these matters as a House, it is important that we have the documentation within a reasonable time. I think that 30 days is a perfectly reasonable time within which we could expect those documents to be forthcoming. If scrutiny is to be effective, it must be timely. I hope that the Minister will treat the amendments in a positive way, as these are matters that should be pressed.

Lorely Burt: After listening to the argument made by the hon. Member for Hertford and Stortford, it seems entirely appropriate that the laying of the report before Parliament should be timebound. I will be pleased to support the measure, and perhaps the Minister could see his way to incorporating it within the Bill.

Patrick McFadden: The amendments are, quite fairly, concerned with ensuring that there is no undue delay in laying the accounts before Parliament. As the hon. Member for Hertford and Stortford noted, the relevant section of the schedule says:
“The Secretary of State must lay before Parliament a copy of each certified statement and report received”.
The amendments add a time limit on the Minister’s duty to lay a copy of the LBRO accounts before Parliament and the Welsh Assembly. In principle, we recognise the importance of timing in the interests of proper public accountability. The hon. Gentleman said that scrutiny was improved with speed—perhaps that was not quite the word, but certainly without undue delay—and our intention is for copies to be placed in the House as soon as the accounts have been signed off by the auditor. However, in practice, such time limits laid down in statute are uncommon. Although the hon. Gentleman is right to say that there should be no undue delay, it is accuracy that is ultimately important. The Government hope that the hon. Gentleman will not press the amendment, as a statutory deadline might work against the overriding objective of accuracy.
The wording of the amendment might unintentionally create inflexibility. The requirement to air the accounts in this way might mean that they could only be made available on dates when the House is sitting. That might make a 30-day deadline difficult to meet, for example, if accounts were presented early in the recess. We could even inadvertently cause a delay as we may need to refuse them in order not to fall foul of the statutory requirement. I am sure that that is not the hon. Gentleman’s intention, but the way that it might fall could inadvertently slow the process down.
In previous debates I referred to a couple of precedents, and I hope that the Committee will bear with me if I do so again. For example, the Natural Environment and Rural Communities Act 2006, which set up Natural England, does not set time limits for the agency’s accounts to be laid before Parliament. The Education (Schools) Act 1992, which set up Ofsted, also specified no time period for laying the chief inspector’s report before Parliament. I sympathise with the intent behind the amendment. The hon. Member for Hertford and Stortford is absolutely right: there should not be undue delay in these matters and the Government do want to see accounts dealt with promptly.

Mark Prisk: The Minister says that he accepts the principle behind the amendment. If the Government are willing to bring forward a different time period, or an adjustment in the words, I would be happy to withdraw the amendment. It may be that actually, the Minister does not want any time limit at all.

Patrick McFadden: I cannot promise the hon. Gentleman that I will bring forward a different time limit. While he is right to stress that the accounts should be laid before Parliament as soon as possible, the overriding objective must be accuracy and I would resist putting a number of days in the Bill. I hope that he will not press the amendment. If he does, I would ask my colleagues to resist him for that reason. However, I understand exactly his point about the desirability of avoiding undue delay. That is certainly the Government’s objective, but we also have the overriding objective of making sure that the accounts are right.

David Kidney: My hon. Friend will be asking us to vote no to a time limit. He has given a list of other Acts of Parliament that have a similar requirement with no time limit. Has a rule, a convention, a practice or a rule of thumb been developed under which there is a time that Departments aim for when they submit such documents to Parliament?

Patrick McFadden: My hon. Friend asks whether there is an informal rule outside 30 days. We certainly try to deal with matters each year before we go into recess. We do not do so by a number of days, but we try to avoid undue delay. The precedents that I quoted in respect of Ofsted and Natural England do not have such time limits. I completely agree with the sentiment of avoiding undue delay, but to put a number of days in the Bill might lead us, for the reasons that I have explained, to unintended consequences. I hope that accuracy would be accepted as the main objective, and if the accounts are accurate there should certainly be no undue delay in tabling them.

Judy Mallaber: In the event that the reports or accounts were published at the start of the summer recess. and thus would not be before Parliament for a period, would they still be published in some form so that people could see them or would that have to wait until Parliament sits again?

Patrick McFadden: My fear is that the effect of the amendment would be that if the accounts were coming to us shortly before the summer recess, we might say that we do not have the 30 days and that it would be better to receive them after the summer recess. That would cause an inadvertent and unintentional delay. I absolutely respect and agree that there should not be undue delay, but I am not quite sure that setting down a time limit of 30 days is the correct way to ensure that.

Mark Prisk: I am grateful to the Minister and hon. Members for the debate because it is important that we can ensure that our scrutiny is effective. The presentation of documents to this place must therefore be timely. To say that something is uncommon is one of the weakest arguments that I have come across. It is uncommon, dare I say it, for England to win the World cup, but that does not necessarily mean that it is a bad thing—[Interruption.] I shall leave that to the Scots to debate among themselves. I have veered into dangerous territory. The fact that something is uncommon does not mean that it is bad. That was a fascinating but rather irrelevant argument.
The Minister said that he recognised the merit of the fact that we need to have documentation in a timely way. I do not buy the argument that somehow inaccuracy will result. We are discussing the annual report that the LBRO is required to present to the Secretary of State. We are not talking about a time limit for the LBRO to get its accounts right, but the time from when the Secretary of State receives the documents and when he or she decides to place them in the Library of the House of Commons. The accuracy argument does not work. It might work if it was about 30 days for the preparation of the accounts. That is a perfectly legitimate argument, but it does not work in the context under discussion.
I recognise fully that 30 days is not a perfect answer, but I accept that quite understandably Ministers wish to have no trammels on their ability to act. However, we should not simply accept that. The hon. Gentleman is an honourable man. I am sure that it would be his wish and intention to present the documents in time, but we might not necessarily be dealing with him. We need to think of future Ministers and other circumstances, and need to ensure that the House can pursue its scrutiny effectively. Unless he can offer me something that would show recognition with a time limit perhaps on Report, it is not my intention to withdraw the amendments.

David Kidney: The debate has raised an interesting point, and I am as surprised as the hon. Gentleman that major bodies, such as Ofsted and Natural England, send reports to the Secretary of State, who then apparently has no time limit at all in which to lay them before Parliament. That is a serious omission in Parliament’s administration. If we think of something such as a Select Committee report, Ministers are required by convention, rather than a rule, to reply within two months. That would perhaps get us over the Minister’s main objection about recesses. Does the hon. Gentleman think that if he presses the amendment to a vote in the Committee, whatever the result, maybe the Procedure Committee ought to be looking more generally at all such reports and a time scale for laying them before Parliament?

Mark Prisk: The hon. Gentleman is absolutely right to say that the House, beyond this Committee—I will not stray too far away—needs to think about how we can tighten up the procedures so that there is a process. I cannot believe that Whitehall is opposed to a process, although I can understand the wish to reserve a certain flexibility, but the hon. Gentleman is absolutely right, and that is why I wish not to withdraw the amendment, but to press it to a Division to proceed with the matter.

Question put, That the amendment be made:—

The Committee divided: Ayes 6, Noes 8.

Question accordingly negatived.

Schedule 1 agreed to.

Clause 2 ordered to stand part of the Bill.

None

Replacement of the LBRO company by LBRO

Mark Prisk: I beg to move amendment No. 46, in schedule 2, page 43, line 30, leave out paragraph 3.
This is purely a probing amendment, so we seek not to delete, but to clarify. Paragraph 3 relates to matters of tax, including stamp duty land tax. Can the Minister tell us whether the effect of the paragraph is intended to be retrospective?

Patrick McFadden: As the hon. Member for Hertford and Stortford says, the provision is about the tax treatment of the LBRO as it becomes a statutory body. We are keen to make the transfer from the operation as a private company to a statutory body as smooth as possible. The creation of LBRO as a company last year has enabled a lot of good preparatory work to be done to make it ready for that transition. However, the Bill needs to provide for transfers to the statutory corporation when it comes into existence, and that involves the transfer of property, which would have tax consequences, whether through income or corporation tax, or stamp duty.
The transfer of assets and liabilities from the LBRO company to the LBRO could result in inappropriate tax consequences for the transferor or transferee, which would arise solely because of the transfer. For example, property transferred for no consideration could be treated as transferred at market value for capital gains purposes. Paragraph 3 addresses those consequences by providing tax neutrality. It ensures that a transfer will not give rise to a tax change or confer a tax advantage on either the transferor or the transferee. This is about ensuring that the transition between the private company and a statutory body can operate without unintended tax consequences. In terms of retrospection, I am not clear what the hon. Gentleman is driving at, given that we are talking about a transfer that is to take place if the Bill is approved by Parliament. The schedule deals with the tax implications of the transfer at the point that it takes place.

Mark Prisk: My concern is that the LBRO company will engage in a series of activities, assets and so on, possibly including real estate, which would, on transfer to the new body, create a potential tax liability—stamp duty land tax being the obvious example. Many of those taxes relate to the change in value from the original purchase. Does the measure address the liability at the point of transfer solely, or is it concerned with the tax matters since the incorporation of the LBRO company, and thus retrospective?

Patrick McFadden: My understanding is that there should not be an issue with the change in value of assets that the hon. Gentleman describes. I am happy to give him further detail about that, but the schedule deals with assets at the point of transfer. That is the key point. The schedule seeks to avoid unintentional or unwelcome tax consequences that could arise as the result of a move from a private company to a statutory body.

Mark Prisk: It is a hideously complex prospect, but one that it is important to clarify. I am grateful to the Minister for offering to write to me and, I presume, the Committee members, to clarify the matter. I appreciate that it may be something that is beyond his immediate knowledge. On that basis, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Schedule 2 agreed to.

Clauses 3 and 4 ordered to stand part of the Bill.

Schedule 3 agreed to.

Clause 5

Objective relating to general functions

Mark Prisk: I beg to move amendment No. 1, in clause 5, page 3, line 37, at end insert—
‘(d) in accordance with any Code issued from time to time under Section 22 of the Legislative and Regulatory Reform Act 2006 (c. 51).’.
Amendment No. 1 would insert a new paragraph (d) to clause 5. Its purpose is expressly to include Hampton principles in the LBRO’s objectives. The reason goes back to the origins of the Bill, namely, the Hampton review of regulatory enforcement. The principles include co-ordination, consistency of regulatory enforcement, a risk-based approach—targeting the rogues and not the individual who has made the odd error—and, most important, securing compliance with rules rather than just chasing prosecution. Those principles are supported by Opposition Members and by many businesses. Indeed, the amendment has the support of a number of businesses and their representatives, including the British Retail Consortium. Although I appreciate that subsection (2) lists some of those principles, it is neither explicit nor complete. The amendment would strengthen the clause, and I look forward to hearing the Minister’s reply as to why he thinks the reverse, or whether in fact he is only too delighted to accept the amendment.

Lorely Burt: I am happy to support the Conservative amendment. It seems a sensible way of strengthening the intentions of the Bill.

Patrick McFadden: Clause 5 is important as it sets out the principles of better regulation to which the LBRO will have regard. As the hon. Member for Hertford and Stortford mentioned, subsection (2) sets out its functions stating that
“regulatory activities should be carried out in a way which is transparent, accountable, proportionate and consistent...targeted only at cases in which action is needed”.
Those of us with history in such debates are familiar with those five principles, which have become an important part of the policy framework regarding better regulation. The amendment deals specifically with the regulators compliance code, recently issued under section 22 of the Legislative and Regulatory Reform Act 2006. The scope of the code in respect of local authorities coincides closely with parts 1 and 2 of the Bill. It applies to local authorities in their exercise of trading standards, environmental health, licensing and fire safety functions. The LBRO will, therefore, take an interest in the performance of local authorities when delivering its duties under the code.
However, including a provision in the Bill that requires LBRO to ensure that local authorities act in accordance with it could cause confusion for businesses and local authorities. Although I understand the intention behind the amendment, its effect would be to place local authorities under two contradictory legal obligations. The provisions in section 21 of the 2006 Act and the legislative and regulatory functions order under which the code was issued, require local authorities to have regard to the code. Legally, that means that in certain circumstances, a local authority can take the code into account but decide not to apply it.
Amendment No. 1 would require LBRO to ensure that local authorities act in accordance with the code. Under that requirement, the circumstances in which a local authority could decide not to apply it are limited almost to none. It would be undesirable to have those two contradictory legal requirements running side by side.

Mark Prisk: I would like to clarify something. Subsection (2)(b) says
“regulatory activities should be targeted only at cases in which action is needed”.
Is it the Government’s intention—this may be helpful in the debate, certainly to those who are concerned about the matter—that the measure would seek to implement the full Hampton-compliant, risk-based approach?

Patrick McFadden: Certainly, these are known as the Hampton principles. They are an important guide for regulators and Government in framing regulation. My point and, to use more colloquial language, the Government’s view is that subsections 2(a) and (b) cover what should guide the functions of LBRO under the clause. Our problem is that amendment No. 1 would have local authorities not only having regard to LBRO, but acting in accordance with it, which would present them with two potentially contradictory legal requirements running side by side. It would require them to do that bit more by amending the objectives of a different body altogether. I am not sure that is the best way to legislate.

Mark Prisk: Is the Minister saying that the Government believe that, together, subsections (1) and (2) would require local authorities to be wholly compliant with Hampton? Is that correct or not? If it is correct, it would be immensely helpful.

Patrick McFadden: The provision requires local authorities to conduct their business according to the five principles set out in the clause. I hope that I have been helpful to the hon. Gentleman.

Mark Prisk: I think that we have got there in the end. The purpose of the amendment was to establish explicitly what would happen. I fully understand that subsection (2)(a) on the key points of transparency, accountability, proportionality and consistency is important, but the risk-based issue is unclear under subsection (2)(b). Several businesses that will be affected by the provision have wanted matters clarified. The Minister may have just provided that clarity, and I am grateful to him for that. In a charitable sense, I say that the hon. Gentleman has made progress by covering such matters, and I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lorely Burt: I beg to move amendment No. 49, in clause 5, page 3, line 42, at end add—
‘(c) regulatory activities should be carried out on the basis of a risk assessment of the regulated person which should include their propensity to comply with the regulation.’.

Christopher Chope: With this it will be convenient to discuss amendment No. 50, in clause 13, page 7, line 9, at end add—
‘(c) regulatory activities should be carried out on the basis of a risk assessment of the regulated person which should include their propensity to comply with the regulation.’.

Lorely Burt: The Hampton review recommended that all regulatory activity should be based on a clear, comprehensive risk assessment. The LBRO should have the power to ensure that any sanctions or inspections should follow a risk assessment via the regulator or local authority. If they target those that present high risks, it would give more freedom to target rogue traders. It would free up resources and it would reward compliant companies with a light-touch regime, which is the reasoning behind the amendment.

Patrick McFadden: We are in similar territory to that of the previous amendment. Under clause 5, LBRO is required to secure that local authorities exercise their functions in a way that is effective, does not give rise to unnecessary problems and complies with the five principles under subsection (2) that we discussed a moment or two ago. They are the principles of better regulation, which inform policy in such areas, and they are becoming increasingly integrated into the legislative framework for regulators. They feature, for example, in Ofcom’s primary legislation and many regulators are required to have regard to them under the Regulatory Reform Act 2001.
I agree with the hon. Lady that the assessment of risk should be at the heart of regulatory activity, but so should many other commendable practices, such as giving clear advice to those who are subject to regulation and others, too. I am not sure that it is wise to single out this particular issue when the principles of good regulation already address the point. In particular, subsection (2)(b) says:
“regulatory activities should be targeted only at cases in which action is needed.”
The key ideas behind the five principles are probably targeting and proportionality, reflecting the view that regulation should be based on an assessment of risk. The Better Regulation Task Force publication “Principles of Good Regulation” expanded on the principles and on the best means of implementing them in practice. The guidance covers the issues raised in the amendments, and it may help the hon. Lady if I quote from it. The guidance says that targeting, for instance, demands that enforcers should
“focus primarily on those whose activities give rise to the most serious risks.”
The issue is therefore covered in Government guidance. 
The inclusion of the principles in clauses 5 and 13 deals with the issue raised in the amendments and makes them unnecessary. I hope that that gives the hon. Lady some reassurance that a risk-based approach is very much built into clause 5.

Lorely Burt: I am grateful to the Minister for his explanation of where else in the Bill I should seek reassurance that the risk-based approach is included. With that reassurance, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 5 ordered to stand part of the Bill.

Clause 6

Guidance to local authorities

Question proposed, That the clause stand part of the Bill.

Patrick McFadden: Clauses 6 and 7 are important to the functioning of the LBRO, so I hope that the Committee will not mind if I delay it for a short time to set out some of the issues.
Clause 6 gives the LBRO the power to issue guidance to local authorities setting out how they should exercise their relevant functions. Once again, the clause requires authorities to “have regard” to guidance given under it. It will give the LBRO the right to disseminate best practice on the full range of trading standards, environmental health, licensing and fire safety regulations that come within the scope of part 1. That will be critical to the LBRO’s objective of promoting better regulation at a local level.
That means, for example, that the LBRO could issue guidance to all local authorities regarding best practice in implementing legislation on trading standards. It could also issue guidance to a select number of local authorities regarding their approach to the implementation of risk-based regulatory enforcement, which we have just discussed. Equally, it could issue guidance to one authority regarding its approach to encouraging compliance among small businesses. Before the LBRO can issue guidance, however, the clause requires it to consult business or business representatives, local authorities and such other persons as it considers appropriate.
That guidance function is important and goes beyond the referee or arbitration function, which I am sure that we will discuss in part 2. Indeed, one of the key reasons for setting up the LBRO is that there is currently a gap in the provision of sufficiently clear guidance to local authorities about how legislation is to be interpreted and enforced. The clause is therefore important.

Question put and agreed to.

Clause 6 ordered to stand part of the Bill.

Clause 7

Guidance to local authorities: enforcement

Mark Prisk: I beg to move amendment No. 2, in clause 7, page 4, line 24, leave out ‘LBRO’ and insert ‘The Secretary of State’.

Christopher Chope: With this it will be convenient to discuss the following amendments: No. 3, in clause 7, page 4, line 24, leave out first ‘it’ and insert ‘he’.
No. 4, in clause 7, page 4, line 30, leave out subsection (2).
No. 5, in clause 7, page 4, line 32, leave out ‘LBRO’ and insert ‘The Secretary of State’.
No. 6, in clause 7, page 4, line 36, leave out ‘(2) or’.
No. 7, in clause 7, page 4, line 37, leave out ‘LBRO’ and insert ‘The Secretary of State’.
No. 8, in clause 7, page 4, line 41, leave out ‘LBRO’ and insert ‘The Secretary of State’.
No. 9, in clause 7, page 5, line 1, leave out ‘LBRO’ and insert ‘The Secretary of State’.
No. 10, in clause 7, page 5, line 1, leave out ‘it’ and insert ‘he’.
No. 11, in clause 7, page 5, line 2, leave out ‘it’ and insert ‘him’.

Mark Prisk: I am grateful to the Minister for his remarks on clause 6. They are also relevant to clause 7, so it is helpful to have them on the record.
Clause 7 gives the LBRO the power not merely to offer local authorities guidance, which the Minister referred to, but to direct them. As such, it creates a significant precedent: namely, that a public body that is not directly accountable to this House can direct any of our local authorities in relation to more than 140 enactments. If Committee members have not yet had the chance, it would be worth looking at schedule 3 on page 44, which shows the number of pieces of legislation that we are dealing with. The gamut of legislation ranges widely through employment, criminal justice, the environment, animal welfare, antisocial behaviour, licensing, local government, mining and office arrangements.

Patrick McFadden: The hon. Gentleman is right that a large number of enactments are listed under schedule 3. It is important to clarify for the Committee that those encompass the key functions of local authorities with regard to regulation. They could be brought together under the headings of trading standards, environmental health, licensing and fire safety. Schedule 3 is the Government’s way of illustrating the enactments that cover the key headings for local authority enforcement. There is coherence in what is encompassed by schedule 3.

Mark Prisk: I am grateful for that information. The Minister is right to say that it is a helpful list. That is why I wanted to draw it to the attention of the Committee. There is a natural assumption that we are dealing with the Bill before us and no other legislation. However, we are dealing with a series of Acts that deal with the involvement of local authorities. My point is that the Bill has wide-reaching implications and that it could undermine local democracy.
The proposal has understandably attracted considerable concern, not least when it was debated in the other place. It was notable that not just peers from my party, but those from all parties represented on the Committee and from the Cross Benches expressed their concern about the potential effect of the Bill. Lord Eccles rightly questioned Ministers about the reasoning behind the unprecedented nature of this step.
For the benefit of the Committee, I will clarify what has happened in this area. As I understand it, to date directions have been Executive orders made by Ministers, usually as a last resort and limited to administrative matters. Those Ministers are directly accountable to this House. I have no problem with that process because it is targeted and accountable.
In response to the criticism of this measure, Ministers in the other place argued that it is not a precedent. They argued that the food Act established the rules in this matter. That Act allows the Food Standards Agency to issue directions to local authorities about the implementation of that Act. To date, the FSA has issued a code of practice concerning EU and UK regulations, but no direction has been issued. Such arguments that have been put forward by Ministers are therefore incorrect.
The food Act is very different from the Bill before us. It permits directions only about the law. The Bill will permit the LBRO to direct all of our local authorities with regard to its guidance. That is a very different matter. In my view the situation is compounded by the LBRO being largely untested as it is a new organisation and its guidance being unpublished. We have no means of judging how its directions might work, yet we are being asked to grant the power in advance.
That brings me to the amendments. In some ways, I would prefer to delete the clause altogether, but we try on the Conservative Benches to be positive and to improve legislation where we can. I am offering the Minister a compromise. Instead of simply scrapping the clause, amendments Nos. 2 to 11 would switch the power of direction back into the hands of the Secretary of State. That would at least create proper accountability, given that the powers potentially affect every one of our local authorities in relation to 140 different pieces of legislation.
This is a positive set of amendments. I look forward to hearing the Minister explain why the power of direction is needed and why, for the first time, a non-departmental public body is being granted such a power in advance.

Lorely Burt: I tabled an amendment to delete the clause, but although the amendments are something of a compromise in transferring the LBRO powers to the Secretary of State, I would be happy to support the hon. Member for Hertford and Stortford if he decided to press them to a Division. It is fair to say that none of us is happy with giving directive powers to non-elected bodies over elected bodies—in other words, over local authorities.
Clause 6 gives the LBRO the power to issue guidance to local authorities on the exercise of their regulatory functions. Local authorities are required to have regard to such guidance. In addition, every local authority has to have a published enforcement policy, and will be required to comply with the new statutory regulations compliance code, which requires them to exercise their regulatory functions in a clear, proportionate and transparent manner. We therefore believe that clause 7 is not necessary.
If a local authority does not pay due regard to the guidance issued by the LBRO, a range of mechanisms are already available to the LBRO, another local authority or a regulated person or entity in order to hold them to account for any failure. Those mechanisms include legal appeal mechanisms if the failure results in any form of enforcement action, and the corporate complaint procedures that every local authority is required to publish; and there is the independent local ombudsman.
Clause 7 was amended in the other place to add subsection (4), which requires directions that affect more than one local authority to be subject to the negative procedure; it also added subsection (5)(a), which requires the LBRO to consult the local authority that it intends to direct before issuing the direction. Under subsections (2) and (3), the LBRO must obtain the consent of the Secretary of State or Welsh Ministers before issuing a direction.
However, none of those safeguards alters the fact that, because local authorities have to have regard to LBRO guidance under clause 6, the possibility of issuing directions will arise only if authorities have good reason for acting differently. It is most likely to arise if the authority feels that the LBRO guidance runs counter to its statutory obligations. The power could therefore give rise to lengthy legal difficulties over whether its guidance can take precedence over an Act of Parliament.

Patrick McFadden: I begin by agreeing with the hon. Member for Hertford and Stortford that clauses 6 and 7 go together and are probably best seen in the same light. Our discussion takes me back to the first question that the hon. Gentleman asked this morning, which was whether I and the Government were confident that a relatively small organisation such as LBRO would have the teeth to do the job. That is what clause 7 is about.
One obviously believes that guidance will mostly be observed, but if not the question is whether there should be a power to issue directions in some circumstances. It is intended to be a backstop power that might be used, for example, where one or more local authorities persistently disregard a particular piece of guidance to the detriment of business or the general public.
The LBRO may use the power only with the consent of the Secretary of State or Welsh Ministers and after consultation with the local authorities to whom the direction is being given, any relevant regulator and such other persons as LBRO considers appropriate, including, for example, representatives of bodies such as the Trading Standards Institute or the Chartered Institute of Environmental Health. Where LBRO gives direction to two or more local authorities, ministerial consent must be given in an order. I believe that that provision came about partly as a result of the recommendations of the Delegated Powers and Regulatory Reform Committee, which was keen to ensure proper procedures for issuing such directions. There was considerable debate on the issue in another place. The clause has been amended to take account of those discussions, and I think that it has been improved by it.
The argument is that the powers are unprecedented and that there is a lack of democratic accountability in how they work. To give a bit of background, we started consulting on them last year. The consultation made it clear that a number of stakeholders were concerned to ensure that the body would have real teeth in carrying out its functions. We proposed the backstop power to be used in circumstances like the ones that I have outlined.
The hon. Member for Hertford and Stortford took issue with the comparison with the Food Standards Agency quoted in this debate. It is not an exact parallel, but it is the closest precedent. Under section 40 of the Food Safety Act 1990, the agency may give directions to a local authority to take steps to comply with a code of practice, much as the LBRO may require a local authority to comply with its guidance. It is also true, however, that the Food Standards Agency has extensive other powers to which LBRO will not have access: for example, the power to audit local authorities’ performance of their functions or even to take over the management of local authorities’ relevant functions directly at the request of the Secretary of State. I am not sure that what is proposed in the measures is a constitutional precedent that goes beyond what happened before. It is important and right that clause 7 should contain safeguards, partly in response to some of the concerns raised.
The use of the powers of direction is subject to the consent of the Secretary of State. The example quoted from the Food Standards Agency is weaker, as the Food Standards Agency must only consult the Secretary of State. That falls short of the strict requirement in the clause to secure the Secretary of State’s consent. LBRO, as I said, must also consult any local authority subject to directions, and parliamentary approval will be required where the directions affect more than one authority.
The amendments tabled by the hon. Member for Hertford and Stortford would transfer the power from LBRO directly into the hands of the Secretary of State. The issue is clearly one of democratic accountability and ensuring that LBRO gives directions to local authorities in a proper way. He believes that that should be done only by an elected person. We believe that the requirement in clause 7 for ministerial consent is an important democratic safeguard. Hopefully, it will have the effect that he wants, which is to secure democratic accountability in the exercise of the power. LBRO will be able to propose directions, but the decision to approve their use will rest firmly with Ministers. From the accountability point of view, the effect would, in the end, be the same because Ministers would effectively be responsible for any use of the directions. However, the amendments would make the provision work in quite a different way because transferring the power to direct into the Secretary of State’s hands would undermine LBRO’s position as the expert body on regulatory guidance, and would place the Secretary of State in a more active decision-making role. Although he might, of course, argue that it is open to LBRO to give advice to the Secretary of State on when or whether to direct, making the Secretary of State the decision maker would change the way in which LBRO’s role is perceived in practice. Doing so would ultimately undermine the provision, which is importantly and rightly surrounded by proper democratic safeguards.
The provisions in clause 7 are important to enable LBRO to achieve its objective, and sufficient safeguards are in place to ensure that LBRO uses its power to direct compliance with guidance in a responsible manner. The idea of direction has support from a number of groups. I shall quote one or two of them. For example, the British Retail Consortium said:
“In our view, the LBRO should be able to decide the strength of the guidance—i.e. it should decide whether authorities must comply; whether they should have regard to the guidance; or whether it is merely advisory.”
It is not just business groups that say such things; the National Consumer Council has said:
“Although we recognise the concerns of local authorities, we consider this measure is necessary to ensure that consumers do not experience a postcode lottery.”
The Trading Standards Institute has stated:
“TSI believes...it is necessary that LBRO has the power to direct local authorities that are at odds with central guidance in order to ensure a consistent regulatory environment.”
The CBI said.
“we would welcome moves to maintain the powers of the Local Better Regulation Office (LBRO). Business has been promised a better regulatory environment if regulators are awarded new powers. But this requires regulators to deliver on this, and we think it important that the LBRO is given the appropriate powers to ensure that local authorities do just this. Maintaining Clause 7 as currently drafted, which gives the LBRO powers of direction, would help achieve this”.
So, a significant number of voices are saying not just that there should be a power of direction, but that the LBRO should be the body using that power.

Judy Mallaber: My hon. Friend referred to the National Consumer Council. Will there be provision for consumer organisations to be consulted as part of the process, because that is not in the Bill? There has been concern that businesses get consulted but that the consumer’s voice does not get heard.

Patrick McFadden: That is certainly possible. I refer my hon. Friend to subsection (5), which states:
“Before giving a direction under this section LBRO must consult—
(a) the local authorities in England or Wales to whom the direction is to be given;
(b) any relevant regulator, and
(c) such other persons as LBRO considers appropriate.”
So, it is certainly open to the LBRO to consult the National Consumer Council—although I do not pretend that that is written in the Bill in every instance.
I am coming to the conclusion of my remarks. I quite understand why both the hon. Members for Hertford and Stortford and for Solihull asked questions about the power for an organisation, such as LBRO, to direct local authorities. What is the Bill about in the end? It is about ensuring that there are teeth in the better regulation effort at a local level. It is fair for hon. Members to say that with teeth should come some democratic accountability. As drafted, clause 7 meets that democratic test without setting up a system that hampers the LBRO’s work. It contains provisions relating to consultation, and the consent of the Secretary of State, and provisions for consent to be given by order where a certain number of local authorities are involved. That is the balance that we have to strike in the clause.
The powers do have some precedent in the example that has been quoted. I believe that business wants these powers and other organisations such as the Trading Standards Institute and the National Consumer Council have also said that they support them. The amendment would not provide a gain in terms of democratic accountability—that is a fair question to ask, but it is something that we have covered. The amendment might actually make that more difficult to operate, not in everyday situations, but on those occasions when guidance is not enough and it is necessary to exercise the teeth that we began today’s proceedings by calling for.

Mark Prisk: It has been a useful debate, but I am not convinced by the Minister’s arguments. He is right to say that the clause has been significantly improved. It was improved in the other place by the efforts of Members of that House and there are certain measures, which he has referred to, that have made it a better clause. However, there remains the question of a precedent. He has only been able to cite one example: the Food Standards Agency. As I have demonstrated, that agency seeks to direct the implementation of an Act, not of guidance, and that is an important difference. Unless he has three other good examples, I have not heard from him where this is not a precedent. We remain clear, therefore, that although the example that has been offered has some relevance, it is not directly the same, and that therefore a precedent has been established.
What about the question of teeth? The purpose of my amendment is not to remove the power to direct—it could be quite legitimately argued that that would remove the teeth. To continue the metaphor, and I shall probably stop it at that point, the teeth remain. I am concerned with how they are harnessed and the accountability. The clause already asks that where the LBRO seeks to make a direction, it goes to the Secretary of State. That does not solve the problem that although that body is accountable to the Minister, it is not accountable us in this House. I understand, therefore, that business will take the view that it does and I do not disagree with that view. Looking at how businesses responded to the Bill, I have a string of quotes here about their concerns about it. The CBI, which the Minister referred to, said on 21 May:
“This Bill requires business to take a leap of faith: it proposes that regulators be awarded additional powers to sanction business in exchange for the promise of a better regulatory environment.”
We could trade quotes as to who is in favour of which bit or whatever; the fundamental question is whether this power needs to be in the hands of an unaccountable non-departmental public body.
For the first time, we have no sight of the guidance that we are supposed to be providing direction powers for. We are not able to say that this is a long-standing, tried and tested public body that is known to this House, that has established principles and procedures and with which we are familiar. We are being asked in advance to give a body with which we are not familiar, which is not directly accountable to us, the ability for the first time to give directions on its guidance and not on legislation. There is a fundamental difference with any precedent that has been established. On that basis, I am not convinced by the Minister’s arguments and I therefore seek to press the amendment.

Question put, That the amendment be made:—

The Committee divided: Ayes 6, Noes 8.

Question accordingly negatived.

Clause 7 ordered to stand part of the Bill.

Clause 8 ordered to stand part of the Bill.

Clause 9

Advice to Ministers of the Crown

Question proposed, That the clause stand part of the Bill.

Patrick McFadden: I do not want to delay the Committee unnecessarily. We have been talking all morning about the job that LBRO is set up to do and whether it fills gaps in the current regulatory market. One such gap is regarding advice to Ministers, which is covered by clause 9. The Hampton review recognises that many of the difficulties that regulatory enforcement poses for business, arise not from any failing by the local authorities, but from the complexity of the system that they sit at the centre of.
We expect that LBRO will work to bring better co-ordination and intelligence to the way that Government Departments and the national regulators work together in setting the framework for local authority enforcement. LBRO will have an insight into how regulation is enforced by local authorities from the perspective both of those local authorities and the businesses subject to the regulation. It is important that the body has the power to advise Government on such matters, and perhaps to challenge the various players in the field in order to make the system more coherent and streamlined. Clause 9 provides such a power and makes provision for LBRO to
“give advice or make proposals to a Minister of the Crown”
regarding the way that local authorities exercise such functions, the effectiveness of the legislation, whether it would be appropriate for other regulatory functions to be exercised by local authorities and other matters relating to that. That is part of LBRO’s job, and its advice function will be an important one.

Judy Mallaber: This is potentially an extremely useful part of the Bill. Will my hon. Friend advise us on how open it would be for local authorities to use this measure to express their concerns about regulatory functions? For example, will they be able to talk about the way that other Government agencies, besides those with which they are directly involved, exercise their regulatory functions, or will they be able only to comment and pass advice via LBRO back to Ministers specifically in relation to their own regulatory functions? Potentially, it could be an extremely useful mechanism that provides a sounding board and guidance to Ministers across a broad range of issues in relation to a regulatory regime that impinges on a local authority’s constituents.

Patrick McFadden: My hon. Friend is absolutely right. The local authority voice is very important. As I have tried to explain, in LBRO we seek something that sits at the centre of the regulatory system, which involves central Government, local government, regulators and business. Sitting at the centre of the system, LBRO will have an important advice function. The local authorities that LBRO will deal with on a day to day basis will be able to raise any relevant issue—as in fact they already do in LBRO’s current form of a company, and I am sure that that role will continue. The advice function is important, which is why I wanted to draw it to the attention of the Committee.

Question put and agreed to.

Clause 9 ordered to stand part of the Bill.

Clause 10 ordered to stand part of the Bill.

None

Enforcement priorities

Question proposed, That the clause stand part of the Bill.

Patrick McFadden: This clause is also important because it deals with the priorities for regulation at a local level. Over the years, different priorities have been given to local authorities to enforce. Local authorities have said to us in the past, quite fairly, “We are being asked to do a lot of different things. A list of things that we are asked to do by all the different Departments would be long.” With that in mind, the Government recently asked Mr. Peter Rogers to conduct a review of the different local authority enforcement priorities, and to give some sense of priority to the priorities, if I may put it that way. He produced an extremely valuable list, and the clause will ensure that it is updated over time.
It states:
“LBRO must...publish...a list specifying matters to which a local authority...should give priority when allocating resources”
and that local authorities
“must have regard to the appropriate list”.
Of course, rightly, subsections (5) and (6) state:
“LBRO may not publish”
such a list
“without the consent of the Secretary of State”
or, when relevant,
“without the consent of the Welsh Ministers”.
I do think that this is an extremely—

Mark Prisk: On a point of order, Mr. Chope. The Minister is referring to a list of lists. It sounds fascinating, but I am not privy to it, and I do not know whether other Members are, including the hon. Member for Solihull. We are not aware of what is on the list of lists, and it would helpful if it could be made available to the Committee.

Christopher Chope: That must be a matter for the Minister.

Patrick McFadden: Absolutely. This is a public document, so I am happy to furnish the hon. Gentleman and other members of the Committee with the fruits of Mr. Peter Rogers’s work.
The clause is important because it was a valuable piece of work. Local authorities will welcome some sense of what they are expected to concentrate on. The clause gives LBRO the job of ensuring that the list is kept up to date, but I am happy to furnish the hon. Gentleman with a copy of Mr. Rogers’s report.

Mark Prisk: I am grateful to the Minister for agreeing to provide us with that report, not least because one of my questions was how prescriptive such a list would be. Clearly, the Minister is ahead of the legislation.
I agree that clause 11 is important, but will the Minister say where there could be dilemmas? In particular, if a local authority has chosen to focus on a particular problem in its area, why should the LBRO interfere, and how would it do so? That question would certainly be asked by some of our constituents.
Let us take, for example, Wolverhampton, given that it is familiar to the Minister. If the good burghers of Wolverhampton felt that sorting out bad licensees was their No. 1 priority, how would the requirement to “have regard to” a national list work? Who resolves whether or not Wolverhampton is completely ignoring the aforementioned list of lists because it is determined to resolve bad licensees? How does Wolverhampton allocate its resources to square the circle that the Minister described? On the one hand, it must be able to deal with the problems that it faces in its own area and, on the other, to “have regard to” what would clearly be national priorities. Who resolves such a conflict?

Patrick McFadden: The phrase “have regard to” is the key to the problem. The measure is not a power of direction like the one we discussed in our debate on clause 7. It says to local authorities, “The Government understand that you are often asked to do many different things by different Departments. We hope it will be helpful if we publish a list of all the things that we want you to have particular regard to, to give you some sense of priority.”
The hon. Gentleman used the example of the fine city of Wolverhampton and circumstances when a Wolverhampton council would wish to prioritise licensing. As coincidence has it, licensing is one of the areas highlighted by Peter Rogers. The others were air quality, hygiene of food businesses, improving health in the workplace, fair trading, and animal and public health. I do not wish to rest the case just by saying that the example that he cited happened to be on the list. Let us say that Wolverhampton wished to do something that was not one of those six priorities.
We are not talking about the power of prohibition, but the list is a welcome guide to Wolverhampton city council and other local authorities saying, “Of all the different things that central Government ask us to do, what do they really think that we should be spending our time on in enforcement?” It does not prohibit a local authority from looking beyond the list and saying that the six areas are fine, but they have a problem with area No. 7. The list is not a prohibition. It is something that may change and evolve over time, which is why clause 11 is part of the Bill.

Mark Prisk: I am grateful to the Minister. When focusing on the delightful city of Wolverhampton, it is such a pleasure to hear the gentle lilt of the Wolverhampton accent.
As for Wolverhampton’s priorities, one of the issues that we looked at under clause 7 was the power of direction. Can the hon. Gentleman confirm that that power does not relate to anything under clause 11?

Patrick McFadden: The hon. Gentleman will be aware that the local football team in Wolverhampton is called the Wanderers, so perhaps I am not the first wanderer to have arrived in the city.
Clause 7 does not apply to the Rogers list. It is not a power of direction. It does not apply in that way. I shall not go over the ground again. The Rogers list and that sort of exercise is valuable to local authorities, and the provision is about making sure that that value is maintained as time goes on.

Question put and agreed to.

Clause 11 agreed to.

Clause 12

Relationship with other regulators

Question proposed, That the clause stand part of the Bill.

Mark Prisk: I want to pursue the relationship between the LBRO and other regulators. The clause does not deal with local authorities, but other regulators such as the Environment Agency, the Food Standards Agency, the Gambling Commission, the Health and Safety Executive and the Office of Fair Trading. We all know that those bodies all have other duties beyond the specific regulatory matters dealt with under the Bill. To put it briefly, what happens when the LBRO’s priority or guidance is perceived by those regulators as being contrary to their work or in danger of being in conflict with other duties? A classic example could be the Environment Agency, which clearly has other duties under law beyond the immediate regulatory issues that are before us.

Patrick McFadden: There are two main points to make about the clause. Subsection (1) states:
“LBRO and a regulator to which this section applies must enter into a memorandum of understanding with each other as to how they will work together”.
The clause then lists the regulators under subsection (2). Organisations such as the Environment Agency and the Food Standards Agency are major national regulators. They were keen to establish that, when LBRO was set up, there was an understanding of how they should work together. It is envisaged that the documents will set out the ground rules for mutual consultation and so on.
My second point is that the clause is permissive in the sense that other MOUs could be conducted with other organisations. The hon. Gentleman also asked what would happen if a conflict arose, the bone of his question. I stress that the organisations listed would retain their statutory independence. They will have to discuss matters maturely. I do not want the hon. Gentleman to feel that there will be some kind of takeover of these organisations by the LBRO. We are talking about memorandums of understanding, and the organisations concerned will retain their statutory independence under the clause.

Question put and agreed to.

Clause 12 ordered to stand part of the Bill.

Clauses 13 and 14 ordered to stand part of the Bill.

Clause 15

Guidance or directions by the Secretary of State

Mark Prisk: I beg to move amendment No. 27, in clause 15, page 7, line 38, leave out subsection (6).

Christopher Chope: With this it will be convenient to discuss the following amendments: No. 28, in clause 15, page 8, line 1, leave out subsection (7).
No. 29, in clause 16, page 8, line 25, leave out subsection (6).
No. 30, in clause 16, page 8, line 28, leave out subsection (7).

Mark Prisk: These are merely probing amendments, and I do not intend to press them further, but I do want to ensure that there is a degree of clarity.
On clause 7, with regard to guidance, we debated the precedent of a non-departmental body being able to use directional powers. Clause 15 prohibits the Secretary of State from directing the LBRO with regard to its clause 7 powers. I wanted briefly to explore with the Minister the thinking behind that exclusion.

Patrick McFadden: Part 1 specifies two distinct direction-giving powers. The first, which we have discussed, is LBRO’s right to give local authorities directions to comply with guidance under clause 7. The amendments deal with the second power, which relates to a Minister’s right to give directions to LBRO. It is intended as a reserve power. LBRO needs to be independent, but as the hon. Gentleman rightly said on an earlier point, Ministers remain accountable to Parliament for its work. If we found ourselves in a situation where LBRO was acting against the public interest, we would need to exercise such a power. It is unlikely that the power will be used, but it is perhaps prudent to have it in case it is needed.
The issue was included in response to a recommendation by the Delegated Powers and Regulatory Reform Committee. The Committee drew attention to the potential uses to which the two directional powers could be put in combination. It was concerned that Ministers could direct LBRO to direct multiple local authorities and that that would give the power a quasi-legislative character. It felt that the issue needed to be dealt with and recommended that parliamentary scrutiny be applied where LBRO used its directions for more than one local authority and where Ministers had instructed it to do so. Following amendments to implement those recommendations, both can be done only with parliamentary approval. Ministers are unlikely to use their direction-giving power in the sense that I have set out, but a safeguard should be in place.
I hope that clarifies that, in phrasing the clause in the way that we have, we are responding to concerns raised by the Delegated Powers and Regulatory Reform Committee.

Mark Prisk: That was a very helpful explanation, not least because it is now on the record and will help people to understand the distinction that the Minister has just made. It is interesting that the Government felt it right to have accountability directly to Parliament for directions in this instance but not in another instance. However, the Minister’s comments were helpful, and I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 15 ordered to stand part of the Bill.

Clause 16 ordered to stand part of the Bill.

Clause 17

Review of LBRO

Question proposed, That the clause stand part of the Bill.

Patrick McFadden: It is often said when we establish new bodies that we should include some kind of mechanism to review how they operate, and that is what the clause does.
The Government’s impact assessment process requires that all new policies be reviewed to establish their actual costs and benefits and the extent to which the aim behind them has been achieved. The clause commits us to carrying out such a review after three years. It places that commitment on a statutory footing and requires the Secretary of State to review LBRO’s discharge of its functions three years after part 1 of the Bill comes into force. The review should consider whether LBRO is discharging its functions effectively and the extent to which it has attained its policy objective.
Again, the Secretary of State must consult Welsh Ministers and such other persons as he considers appropriate when he conducts the review. The clause is prudent, and it is correct to include it when establishing a new body of this type.

Mark Prisk: I am grateful to the Minister for those remarks. I think that he will acknowledge that the clause represents a significant concession that the Government made in the other place, both in agreeing to our request for a review after three years and in ensuring that that review is laid before both this House and the National Assembly for Wales. I commend my noble Friends for their work in improving the Bill significantly.

Lorely Burt: I particularly welcome this clause. The three-year review makes this quite close to being a sunset clause, for which my party has been calling for a considerable time. We would like reviews to be built into a great deal more Government Bills and regulations.

Question put and agreed to.

Clause 17 ordered to stand part of the Bill.

Clause 18

Power to dissolve LBRO

Question proposed, That the clause stand part of the Bill.

Patrick McFadden: I do not want to detain the Committee, but I do not think that the review makes clause 17 a sunset clause, as the hon. Member for Solihull said. Perhaps clause 18 comes closer to being a sunset clause, although it is not one in the normal understanding of the term.
The clause provides the power to dissolve LBRO. It will be an organisation with ambitious objectives, but it is possible that a day will come when its work has been achieved. As another matter of prudence in such legislation, the clause makes provision for the dissolution of LBRO by way of an order subject to the affirmative resolution procedure. That order could also make provision for the transfer of property rights, liabilities and so on to another person.
I do not want to draw attention to the end of LBRO while we are debating its establishment, but in legislation of this kind it seems prudent to include a provision that allows for the power to wind it up at some point in the future should the Government judge it necessary.

Mark Prisk: I do welcome the provision being put in the Bill, not because there is necessarily an ulterior motive but because it is important that all eventualities are incorporated. Whether this is a sunset clause, a late afternoon clause or a dusky clause, whatever description one might want to give it, it provides an important power and I welcome it.

Question put and agreed to.

Clause 18 ordered to stand part of the Bill.

Clauses 19 to 21 ordered to stand part of the Bill.

Clause 22

Scope of Part 2

Question proposed, That the clause stand part of the Bill.

Patrick McFadden: It is probably prudent to pause for a moment at this point to talk about part 2 of the Bill, to which clause 22 takes us.
So far we have discussed the establishment of the LBRO. We have discussed its powers in relation to advice and guidance to local authorities; we have discussed the make-up of its board, payments to its members, and so on. Part 2 takes us into slightly different territory: its application to regulated persons that carry out an activity in two or more local authorities. This speaks to the very heart of the Hampton report.
We began this morning’s deliberations by talking about two issues identified by the report as problems in the regulatory system as applied at a local level. One of those problems was inconsistency and the other was inflexibility. Inconsistency is at the heart of part 2 of the Bill. Clause 22 limits access to the primary authority scheme to persons—be they business, charity or other organisation—that are regulated by more than one local authority. The intention is to include multi-site retailers and businesses that operate indirectly across local authorities, including, for example, internet sales operations and manufacturers whose goods are sold by another party in a number of local authorities. It will also include some franchises, where the franchisor has extensive control over the compliance standards of its franchisees.

Mark Prisk: If an internet business is based offshore, but trades across that, would I be right in assuming that it would not be incorporated?

Patrick McFadden: My instant response is that he would be right. This can be directed only at businesses that operate in the UK. It is, however, intended to cover businesses that operate in a number of different local authority areas in the UK.

Mark Prisk: The Minister said “the UK”. If we had a business in Aberdeen, would the point I made be the same? My understanding is that this is principally to do with England and Wales. Will the Minister clarify that?

Patrick McFadden: That is not quite right. Part 2 of the Bill has a different territorial scope from part 1, and the business in Aberdeen would be covered by part 2 of the Bill, although it would depend to an extent on whether the regulatory function was a reserved or a devolved matter. We may debate this at greater length if the hon. Gentleman wishes, but on the basic point of territorial extent, part 2 of the Bill extends to Scotland and Northern Ireland in a way that part 1 does not.

Mark Prisk: I do not necessarily need to delay the Committee by deliberating on the matter, but if it were the Government’s wish to clarify it at some point in due course, perhaps in writing, members of the Committee and those seeking to understand this legislation might find that helpful. There is a danger of a little lack of clarity, and while I appreciate that a response may not be at the tip of the Minister’s tongue, it would be helpful.

Patrick McFadden: I am happy to do as the hon. Gentleman asks, but I will also point him to clause 24, which defines “relevant function”, and under subsection (3) states:
“An order under subsection (1)(b) may not specify a regulatory function so far as exercisable in Scotland, if or to the extent that the function relates to matters which are not reserved matters.”
There is a similar provision for Northern Ireland. So there is clarity in the Bill in terms of its territorial scope.
I would also refer him to the—hopefully helpful—guide to the Bill produced by the Department, where on page 7 the territorial scope is very clearly set out. It says that part 1 applies only to England and Wales, and this means that LBRO may issue guidance to which local authorities in both England and Wales must have regard. Parts 2, 3 and 4 apply in England and Wales, and there are specific procedures for matters in Wales in respect of which Welsh Ministers exercise functions that we have touched on. Parts 2, 3 and 4 also apply in Scotland in respect of matters that are reserved, and in Northern Ireland in respect of matters that are not transferred. The Bill therefore has a significantly different territorial scope in parts 2, 3 and 4, compared with part 1. I hope that that clarifies the situation; it is set out in both the guide and the Bill.
May I return briefly to clause 2? As I was saying, the clause and part 2 in general, set out the relationship that we wish to establish between multi-site businesses and the local authorities that regulate them. We shall come on, I am sure, to discuss primary authorities, enforcement authorities, and LBRO’s role in ensuring that that relationship works as smoothly as possible. This is a difficult area that was at the heart of Hampton. We are trying to ensure consistency in enforcement in a way that respects both local authority and, in a way, ensures that businesses get the clarity that they desire from the regulatory system. This is attempting to address the problem of inconsistency, which was a very important point emphasised by Hampton in his report.

Mark Prisk: I am grateful to the Minister for those remarks, which I hope will clarify matters for those whom they will affect. The Minister is right to say that part 2 of the Bill, of which clause 22 is the first clause, seeks to aid businesses that trade in more than one local authority area. The most obvious example of the national business that we would think of is Tesco, which trades in hundreds of local authority areas, and has to cope with a wide variety of different approaches, not just the nature of the rules, but the way in which they are implemented. Understandably, that creates significant difficulties for such enterprises. It is that lack of consistency that the Government are absolutely right to try to address.
I have one fundamental difficulty with that, with which I hope that the Minister can help, although I suspect that the Government have struggled with it. That is that there is an unintended consequence of this, which affects most UK businesses. As the Bill is currently drafted, it would in effect create two regulatory environments: one for multi-site, larger businesses—the Tescos of this world—and one for the small, independent family businesses trading from a single location. Multi-site businesses will be able to select a primary authority, and in doing so, would hopefully have the intention of ensuring that they enjoy a better regulatory environment.
One single example—let us take Tesco—would be that its chief executive would, quite naturally, want to move on from the current local authority arrangements, and would identify what they regard as the most efficient local authority. It might be Wandsworth, or it might be, as its headquarters currently lie, in Hertfordshire. That is not far from my own constituency. What would happen is that the Tesco chief executive would say to the local authority chief executive, “Let us have the most efficient, streamlined, best possible arrangement that we can have.” Quite understandably, the local authority would look at that as an opportunity to set its standards, and would be very keen to oblige.
Meanwhile, the small independent retailer in one site would be stuck with its own authority. In good local authority areas, that would not necessarily really matter. However, what about those people who are stuck in Haringey, or—dare I say it?—the city of Liverpool, not because they are unpleasant areas, because they are delightful and charming areas, but because there is a concern there about the efficiency of their regulators?
Locally, it could mean that on the high street, a small independent retailer has one regulator, but Tesco enjoys a streamlined super-duper, all singing, all dancing, and efficient regime. In other words, there is one law for the big chains, and another for small family businesses.
I am characterising it in reasonably simple language, but it is important to look at the potential unintended consequence. The Minister will, quite rightly, have realised that the critical issue of the clause—as I am sure you will have spotted, Mr. Chope—is consistency. It would be quite right to say, “Mr. Prisk, the lack of consistency that you are suggesting is utter drivel, because if you are on one site only, perhaps consistency will have been achieved.” However, it may be consistency of bad regulation that that business has to suffer.
What I want to explore with the Minister is: what consideration have Government given to what this could mean, not least given the very great pressure on small businesses on our high streets, and the competition that they face from the larger supermarkets? How are small businesses meant to benefit from this measure? What, in the Government’s view, are the options available to them if they find themselves at a disadvantage? There may not be a huge disadvantage, but in competitive terms every incremental difference matters. In regulatory terms, if one small family business were at the behest of the clipboard mentality, while Tesco just up the street was enjoying a much lighter, better regulatory environment, there would an injustice that I am sure the Minister would wish to address.

Patrick McFadden: I should like to make a couple of points in response to the hon. Gentleman’s questions. I am sure that I detect no tone of partisanship in his citing Tesco, given the warm relationship that he enjoys with his local authority.
The current discussion takes us into an interesting area in respect of whether we can criticise any legislation for not doing a job that it is not intended to do. The principle of part 2 is to do with ensuring consistency for multi-site businesses. Let us pursue the example of Tesco, since we are on that subject. Tesco operates in most, if not every, local authority area in the country. There is a particular need for clear enforcement advice in respect of such a national, well-known chain. The shop on the corner operating in one local authority area only needs clear advice, but of a different kind, because it does not face the same issues that arise with a chain of outlets, where conflicting advice may be given between one local authority and another. I am not sure that the hon. Gentleman is comparing exactly the same situations.
The hon. Gentleman suggests that there might be something in the Bill for big business, but asks, what is in it for small business? I would not want small businesses to think that there is nothing in the Bill that would benefit small business. Under schedule 3, with its long list of enactments under the different headings dealing with trading standards, fire and safety, and so on, LBRO will be promoting better regulation across all those fields, regardless of business size. If that helps to lighten the burden of regulation, it will help businesses, large and small.
Many businesses are in between the size of Tesco and the single, family-owned corner shop. For example, a car dealership with outlets across the four boroughs of the black country is not a national outfit, like Tesco, but it might welcome the consistency of advice across three or four quite closely linked local authorities. To local government’s credit, there are existing examples of that. The hon. Gentleman mentioned Liverpool. If memory serves me correctly—I am sure that Committee members will correct me if it does not—on the trading standards front there is quite a successful partnership involving authorities in the Merseyside area, where something like that is already happening. There are benefits to small business and the national chains and to those in between with, for example, half a dozen or so outlets.
We have traded a few quotes today. The Federation of Small Businesses has welcomed, if not pressed for, the creation of LBRO. I hope that this measure benefits small businesses. However, part 2 of the Bill is not designed to do a different job from the one that I set out; it is about consistency for those business organisations or others who operate across a number of local authorities and seek the right set of relationships to ensure consistency. I am sure that we will soon discuss primary authorities, enforcement authorities and how things are to be done.

Question put and agreed to.

Clause 22 ordered to stand part of the Bill.

Clauses 23 and 24 ordered to stand part of the Bill.

Clause 25

Primary authorities

Question proposed, That the clause stand part of the Bill.

Patrick McFadden: The clause is important because it deals with the establishment of primary authorities. As I said, it is important that all businesses operating across multiple local authorities have some access to this scheme. The Hampton report highlighted two problems. First, not all local authorities are prepared to take on the role, leaving some businesses without an effective regulatory partner. The hon. Member for Hertford and Stortford talked about the importance of that. Secondly, the division of labour between local authorities is sometimes unfair, with some councils taking responsibility for a large number of partnership schemes to the advantage of local authorities elsewhere that may host none.
The clause is designed to tackle those problems by giving businesses more certainty and allowing LBRO to facilitate a fairer distribution of responsibility for hosting the primary authority partnerships. The relationship of primary authorities and enforcement authorities is at the heart of part 2 of the Bill. The clause and those that follow are particularly important in setting up that relationship.

David Drew: I agree that this is an important clause, but does the Minister agree that it would be better if services were delivered under one authority, particularly in the areas of trading standards and environmental health? There is a strong argument for unitary authorities.

Patrick McFadden: We have made relatively speedy progress this morning, Mr. Chope. I suspect, if not fear, that pausing for a discussion on which form of local authority is best may detain us for some time. In the fine city of Wolverhampton, we have a single unitary authority. In other parts of the country, we have a different system. I will resist the temptation to pronounce on which model is best. That is a debate for another day.
The clause is designed to do something a little different, which is to begin setting out in the Bill how the relationship of primary authority and enforcement authority is to run.

Mark Prisk: I am grateful for the Minister’s opening remarks on the clause. It is important and establishes the principle of primary authorities. Key to this matter is moving on from the familiar and established procedure of home authorities. If I made an unkind and unnecessary remark towards the city of Liverpool, I am more than happy to withdraw it. It is good to see that there are collaborations. I gather from the Minister that there are collaborations in the west midlands. The car dealership that he referred to, which we will now know as McFadden Motors, will clearly be able to trade across the west midlands with some confidence.
The primary authorities established by the clause lead me to the written evidence submitted by Hertfordshire county council, which I saw this morning. It raises a good and practical series of points. There is one particularly important point on the practical and resource implications of changing from the home authority to the primary authority. I am a Member of Parliament for Hertfordshire and county hall is in Hertford in my constituency. For those who are not familiar with Hertfordshire, it is already established as a home authority for Tesco, Dixons, Nissan, Renault and Orange. It has three dedicated offices working on that role.
I refer hon. Members to the first page of the document from Hertfordshire county council. It states:
“Under the current proposals in the Bill it is estimated that this resource”—
the resource in terms of homes for primary authorities—
“would need to increase by at least 100% assuming that only the largest businesses take advantage of the Bill's provisions. If smaller businesses take advantage of the primary authority provisions in the Bill, this increase could be multiplied several times. We estimate that up to twelve full time officers would be needed to service the increased needs of the thousands of businesses based in Hertfordshire under the requirements of the Bill.”
Three officers are currently required, but that figure could rise to 12. Even if only the largest of the businesses—say only six of them—currently working with the council as a home authority continue to work with it when it is a primary authority, the latter’s resource commitment will double.
The Minister and most Committee members will be aware of the long-held understanding between the Local Government Association and Her Majesty’s Government that additional duties placed on local authorities, in legislation, will be reflected in formula funding. Will that understanding be honoured? Will any duties placed on local authorities under this Bill be directly reflected in their formula funding?

Patrick McFadden: I am grateful to the hon. Gentleman for raising the submission given to the Committee by Hertfordshire county council. I read it with interest last night, and discussed it with Bill officials. Some were surprised by the submission, given how closely that council was involved in the Bill’s development over some months. I shall not take issue with its figures for the number of such staff currently employed, but it is very different from that understood by the Bill team.
The council’s note, however, fails to make reference to the provisions in clause 31, which allows primary authorities to recover costs incurred in the carrying out of its new tasks. The council’s central point is that there are resource implications for local authorities in exercising their functions as primary authorities, which is only right. Clause 31 takes account of that by allowing for cost recovery, the principle of which has resulted in small businesses giving a warmer welcome to the Bill than might have been the case. Without that provision, they might have been concerned that the resource implications would result in too much attention being given to the national chains and not enough to their own. I believe, therefore, that Hertfordshire council’s concerns are met by clause 31. As I said, we were quite surprised to receive such a note from a local authority that has been so heavily involved in the consultation and discussions on the development of this policy.

Question put and agreed to.

Clause 25 ordered to stand part of the Bill.

Clause 26

Nomination of primary authorities

Mark Prisk: I beg to move amendment No. 16, in clause 26, page 13, line 3, at end insert—
‘(c) the regulated person gives 3 months notice that it wishes to terminate the nomination’.
The central purpose of this probing amendment is to enable businesses to terminate the primary authority nomination. As Members will be aware, clause 26 deals with the nomination of primary authorities, but, under subsection (5), it also deals with revocations, which are permitted by the LBRO either where the LBRO considers an authority to be “no longer suitable” or where
“it considers it appropriate to do so for any other reason”.
The latter provision is found in subsection (5)(b). Amendment No. 16 would give a business the ability to indicate its wish to end that nomination. After all, clearly primary authorities will secede only if there is a two-way relationship. It is important for a regulated business to know that, if it no longer wishes to proceed with that relationship, it has the ability to seek a termination, but the clause does not make that clear. It would be most helpful to the businesses concerned if the Minister assured us that subsection (5)(b) will give them that ability.

Lorely Burt: I have growing concerns about the clause. The problem is that the LBRO can nominate a local authority to be a primary authority without its consent. Under the clause, a democratically elected local authority will not have the right to decide on the service provision that would best suit the needs of the local population and economy. Does the Minister agree that the LBRO having the power to decide how a local authority should deliver services is an undemocratic and unnecessary centralisation of control, which runs counter to the principles of the system of local area agreements? Furthermore, surely a forced relationship between a council and a business would not be productive or effective for either party. Surely, a primary authority relationship will work only if both parties want to participate.

Patrick McFadden: This is an important discussion, because how such relationships will work is at the heart of part 2 of the Bill. As the hon. Member for Hertford and Stortford pointed out, the clause deals with how the establishments are to be set up and revoked. They could be ended for several reasons. For example, LBRO might consider a local authority to be no longer suitable for the task, or a business might relocate its headquarters from one local authority area to another and request that a nomination be revoked so that it could enter a new primary authority partnership. There might be a takeover of one supermarket chain by another, as has happened in the past, in which the supermarket that is taking over the other already has a relationship with a primary authority. Alternatively, a business and its primary authority might be abusing the provisions and LBRO might wish to change their partnership.
This issue was raised on Second Reading when sweetheart deals, in which relevant businesses and local authorities have cosy relationships but enforcement authorities have a problem, were discussed. There has to be a mechanism for dealing with such situations, but the amendment would not put LBRO under a duty to change the situation. The examples that I have given involve situations in which a business or a regulated person requests that a nomination be revoked and it is open to LBRO to do that. The amendment would not put LBRO under a duty to do so, but would allow it to. That is already within its power, but it raises questions about whether there are circumstances in which LBRO could refuse a request from a business to put an end to a partnership. The Bill should allow LBRO flexibility to work with a business and a local authority to put a matter right if the relationship is not working. It would not be helpful, in all cases, to have a statutory requirement on LBRO to put an end to a partnership without question. I understand what the amendment is trying to do, but I am not sure that that is the right way to do it.

It being One o’clock, The Chairman adjourned the Committee without Question put, pursuant to the Standing Order.

Adjourned till this day at Four o’clock.